Vanguard users threaten to close accounts after firm blocks spot Bitcoin ETFs

Source: Cointelegraph

Asset manager Vanguard’s apparent decision not to allow the purchase of spot Bitcoin 

BTC $43,382 exchange-traded funds (ETF) on its platform has seemingly pushed a few customers toward the exit door.

According to a Jan. 11 report from The Wall Street Journal, Vanguard said it won’t offer the new spot Bitcoin ETFs on its brokerage platform as they do not align with its traditional offerings.

“Spot bitcoin ETFs will not be available for purchase on the Vanguard platform,” said the company in a statement to the WSJ. “We also have no plans to offer Vanguard bitcoin ETFs or other crypto-related products.”

“Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio.”

Vanguard wasn’t among the 14 issuers to apply for a spot Bitcoin ETF in 2023, and some investors have seen its recent moves as a reason to move their funds to other platforms.

One apparent Vanguard customer, Tony Spencer, claims a spokesperson told him that Vanguard isn’t allowing spot Bitcoin ETFs for purchase because the product “doesn’t fit with Vanguard’s investment philosophy.”

Spencer also claims Vanguard only allows investors to sell Grayscale’s flagship Bitcoin product, the Grayscale Bitcoin Trust, which was recently converted into a spot ETF.

Coinbase’s senior engineering manager Yuga Cohler was among others who said he will be converting his Roth 401(k) savings at Vanguard to Fidelity, which issued one of the 10 spot Bitcoin ETFs that launched on Jan. 11.

“Vanguard’s paternalistic blocking of Bitcoin ETFs does not fit in with my investment philosophy,” Cohler added.

Bitcoin commentator Neil Jacobs said he is also in the process of transferring funds out of Vanguard in response to the reported decision. “Terrible business decision by Vanguard,” he said.

Customers of investment firms Citi, Merill Lynch, Edward Jones and UBS reported they were also unable to purchase spot Bitcoin ETFs on those respective platforms, according to the WSJ. Cointelegraph contacted these firms for comment, some of which have not yet responded.

UBS is considering “unsolicited offers” from prospective spot Bitcoin ETF investors and is making assessments on a case-by-case basis, a source close to the firm told Cointelegraph. The ETF can only be offered in a brokerage account and is only suitable for “aggressive investors,” they added.

It is also understood that some of the 10 approved spot Bitcoin ETFs are on its platform, but not all.

Meanwhile, a Citi spokesperson told Cointelegraph that a spot Bitcoin ETF is already available for its institutional client base, and the firm is evaluating the products for its individual wealth clients.

Merrill Lynch is reportedly waiting to see whether the spot Bitcoin ETFs trade efficiently before deciding to offer the purchase of the Bitcoin products, according to Fox Business reporter Eleanor Terrett, who cited an unnamed source.

Meanwhile, spot Bitcoin ETF trading was accessible on JPMorgan’s brokerage platform. JPMorgan is an authorized participant of BlackRock’s iShares Bitcoin Trust ETF. However, the Jamie Dimon-led bank has shared a risk disclosure to prospective investors considering placing a trade order, according to screenshots shared by Dan McArdle, co-founder of blockchain intelligence platform Messari.

The first day of trading came on Jan. 10 after a long-awaited regulatory approval.

Spot Bitcoin ETF trading volumes topped 4.5 billion on the first day of trading, with most of the flows coming from BlackRock, Grayscale and Fidelity’s Bitcoin ETFs.

The United States Securities and Exchange Commission also approved the 19b-4 and Form S-1 applications of ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Valkyrie, Bitwise and Franklin Templeton. Hashdex has yet to receive S-1 approval.